The new schemes will provide investors with better return opportunities. More cash will come into the market through MF Lite and investment diversity will increase. New products will stop unauthorized investment schemes.
Stock market regulator SEBI has introduced new rules for mutual fund investors. The new changes include the framework of Specialized Investment Funds (SIF) and Mutual Fund Light. Their aim is to give new options to investors and make the investment market better.
What is Specialized Investment Fund (SIF)?
SEBI has introduced Specialized Investment Fund for high-risk investors. Under SIF, asset management companies (AMCs) will be allowed to implement modern investment strategies. These funds will be offered for open-ended schemes and closed-ended schemes. A minimum investment of Rs 10 lakh per investor will be mandatory in these schemes. However, this rule will not apply to accredited investors. Apart from this, SEBI has said that SIF’s branding and identity will have to be ensured separately from mutual fund schemes. Its objective is to promote investor protection and transparency.
Mutual Fund Light
SEBI has introduced the framework of ‘Mutual Fund Light’ for index and exchange traded fund (ETF) schemes of mutual funds. Its objective is to simplify the investment process, encourage new players and broaden the investment market.
What are the main features
The rules have been simplified for new asset management companies (AMCs). AMCs will have to maintain a net worth of at least Rs 35 crore initially. This net worth will be reduced to Rs 25 crore for companies that make profits for 5 consecutive years. MF Light will increase cash in the market and investors will get more options.
Objective of new rules
New schemes will provide investors with better return opportunities. More cash will come into the market through MF Light and investment diversity will increase. New products will put a stop to unauthorized investment schemes, which often promise impractical returns. These changes by SEBI will reduce the difference between mutual funds and portfolio management. Investors will now have more options and they will be able to invest in schemes according to their risk. This move by SEBI will increase transparency in the investment market and will help in attracting new investors.
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